Navigating Microsoft Licensing Changes: A New Revenue Opportunity for LARs, VARs, and SIs

At Orchestry, we’re seeing a surge of interest from large Value-Added Resellers (VARs), Licensing Solution Providers (LARs), and Systems Integrators (SIs) seeking new revenue streams. These partners are reaching out, eager to explore how Orchestry can help them enhance their Managed Services Provider (MSP) offerings, strengthen their customers’ tenant security, and prepare customers for AI-driven collaboration. But why this sudden wave of interest? What’s driving Microsoft partners to rethink their business models? 

Why Microsoft Partners Are Looking for New Revenue Streams

Being a Microsoft license reseller has long been a profitable business, with thousands of companies thriving in the space. However, the market is highly dynamic, with Microsoft frequently adjusting its incentive structures, licensing models, and strategic priorities. Partners that want to stay ahead must be agile, continuously adapting their approach to maintain margins, differentiation, and customer loyalty. 

Another major shift happened on January 1, 2025, as Microsoft implemented changes to Enterprise Agreement (EA) incentives for Cloud Solution Providers (CSPs) (Source). Here’s what you need to know: 

• EA Renewals Have Changed: Certain Enterprise Agreements in direct markets are no longer eligible for renewal under the existing EA framework.
• Customers Will Transition: Affected organizations will be moved to either the Microsoft Customer Agreement for Enterprise (MCA-E) or the CSP program.
• Microsoft's Subscription-First Strategy: This move reflects Microsoft’s broader shift toward a subscription-based licensing model, streamlining how businesses access Microsoft 365, Teams, and Azure services. 

How This Impacts CSPs and Licensing Solution Providers 

As customers move from traditional EAs to the CSP model, the revenue structure for CSPs will change. Under the EA framework, Licensing Solution Providers (LSPs) earned commissions, typically around 1-1.5% of the EA value. With Microsoft shifting towards direct sales and the CSP model, these commissions are being phased out, leading to a potential decrease in revenue from EA renewals for LSPs. 

Example Scenario: Consider a Licensing Solution Provider (LSP) managing 20 enterprise customers, each with approximately 10,000 seats. The average Microsoft Enterprise Agreement (EA) licensing volume per enterprise customer is $4 million, bringing the total EA volume across these customers to $80 million. 

Under the previous incentive structure, LSPs typically earned a 1.5% margin on EA licenses, equating to $1.2 million in annual revenue for this scenario. However, with Microsoft's latest changes phasing out these EA-related margins, LSPs stand to lose this $1.2 million in recurring licensing revenue unless they pivot towards alternative revenue streams. 

However, this transition also presents opportunities for CSPs to offset the reduction in EA margins by focusing on value-added services. By leveraging the flexibility of the CSP program, providers like Crayon and other Microsoft partners can offer tailored solutions, enhanced support, and managed services, creating new revenue streams and strengthening customer relationships. 

Microsoft is also offering a 15% discount on Microsoft 365 E5 annual subscriptions until June 2025 to encourage customers to transition, making this a prime moment for CSPs to bundle governance, AI readiness, and compliance solutions alongside licensing. 

Orchestry: The Perfect Partner for Microsoft LARs, VARs, and SIs 

Orchestry is more than just another Microsoft 365 solution. We empower partners to provide next-level governance, automation, and AI-driven collaboration to their customers. By becoming an Orchestry partner, you can: 

✅ Unlock New Revenue Streams: Expand your service portfolio beyond licensing and offer high-value Microsoft 365 governance and automation solutions.
✅ Deliver Scalable, Repeatable Services: Our platform makes it easy to implement best practices for Microsoft 365 governance, Microsoft Teams lifecycle management, and SharePoint provisioning.
✅ Boost Customer Stickiness & Retention: Organizations need long-term support for governance, security, and AI adoption—partnering with Orchestry positions you as their trusted advisor.

Join the Growing Network of Orchestry Partners 

The Microsoft licensing landscape is changing, but those who adapt and evolve will thrive. Whether you’re a VAR, LAR, or SI, now is the time to differentiate, future-proof your offerings, and unlock new revenue streams. 

Interested in learning how Orchestry can help you capitalize on these changes? Let's talk!